Are you planning to leave one of your adult children less (or more) money in your will? Bad idea, was the consensus of 49 financial planners who offered me their thoughts on this delicate and emotional issue. They agreed: Equal inheritances help maintain family harmony when you're gone. Planner Martin Shenkman of Paramus, N.J., put it succinctly: "Kids equate money and love, no matter what you say."
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There might be good reasons to discriminate. If so, they should be obvious and something that all the children can support. For example, you might leave the bulk of your money for the care of a child with special needs. That not only fulfills your moral obligations but also relieves the siblings of the financial burden of future care.
But other choices might be less obvious. "The success of an uneven strategy will depend almost entirely on family dynamics before the death of the parents," says Rick Brooks, a financial planner in Solana Beach, Calif. A healthy, supportive family will work through any feelings of jealousy or resentment, he said. Mistrustful relatives will have a harder time. Even small discrepancies in inheritance could be the blow that drives them permanently apart. You don't want to leave a war behind, if you can avoid it.
One common reason for considering unequal shares is the relative success of your various children. One might be a business executive who makes a lot of money, another a social worker who earns much less. It may make sense to leave the social worker more. On the other hand, you can't see into the future. The monied child might lose the business or come down with a chronic illness. Or she might feel that you penalized her for her success.
James Miller of Chapel Hill, N.C., had a client who wanted to favor a low-earning son in her will but worried that her wealthier son might think it wasn't fair. Miller urged her to have a conversation. To her relief, the wealthier son agreed completely with reducing his inheritance in order to give his struggling sibling more.
What about cases where parents have already helped one child financially much more than the others? "This is especially prevalent with the recession," says planner Lauren Klein of Newport Beach, Calif. You might decide your support is water under the bridge — one child had bad luck — and leave shares equally. Or you might keep track of your gifts (especially if they're large ones, such as tuition aid for a grandchild) and reduce that child's inheritance by the same amount.
It's especially tricky if one of your children helps take care of you. If you leave that child more, his siblings might suspect a plot and raise a ruckus when the will is read. One way around this risk is to pay the child for care or make monetary gifts while you're alive and split the remainder equally.
If you're not leaving equal shares, tell the kids what you're doing and why. "The greatest mistake I've seen in my practice comes when children have neither been apprised of a parent's intentions nor been invited to participate in the decision-making process," says planner Jay Hutchins of Lebanon, N.H. You might speak with your children one at a time, or you could call a family meeting to explain your thinking. Shared discussions often bring up ideas you might not have thought about.
If you can't bring yourself to talk about unequal shares, at least leave a letter with your will, explaining your decision. The tone of your letter should be compassionate, addressing the questions, resentments and disappointments your kids may have. Parents who say nothing "create a time bomb that will explode when they aren't there to defuse it," says planner Andrew Jamison of Beaverton, Ore. It could also tarnish their memories of you, and even set off a challenge to the will. Sometimes, a child who receives a larger piece of the inheritance will voluntarily share it with siblings — because he feels guilty or thinks the settlement wasn't fair.
Real estate is a particularly knotty problem. Take a beach house, for example. One child might love it, another might live too far away to use it. Leaving it to both of them could stir up trouble. Planner Cheryl Sherrard of Charlotte, N.C., suggests that you ask the children what they think about sharing and paying for the upkeep of the property. The best solution might be to sell the place now and add the proceeds to your retirement funds.
Whatever you decide about inheritance, remember that family harmony is at stake. Wherever possible, equal shares do the trick.
Also of interest: Financial plan beats panic every time.
Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW. She writes regularly for the Bulletin.